Jon Bovit:
Well welcome everyone. We’ll get started in a few minutes. You’re at the Everstream Analytics webinar. We’ll get started shortly. Thanks everybody for joining today.
Well, why don’t we get started? Welcome everyone to the Everstream Analytics webinar entitled The Secret Behind Supply Chain Risk Management and Digital Transformation Strategy. I think we have a fun and exciting webinar for everybody today and look forward to if you have some questions I’ll talk about that in a second, but hopefully this will be a fun and informative session. So let’s get started.
Couple points on the logistics of the event. All attendees are on mute. If you have any questions for the participants today, you can use the chat feature, the chat toolbar that you can see there when you’ve signed in. A copy of the presentation will be sent out to attendees. So no reason to ask that question, we will send that out automatically. So why don’t we get started?
So let me first touch on who will be speaking today. Hi, I’m Jon Bovit, I’m the head of Supply Chain Network Discovery at Everstream Analytics. Joining me today will be Joe Carson who is the CEO of Spend Strategies, LLC. Many of you may already know or be familiar with Joe. He’s held several very senior positions at Micron, Lucent and other areas where he was chief procurement officer, head of strategy and other very senior positions. So Joe, welcome today and glad you can make it. Joe is, I’ll introduce Matt shortly, but is sort of our independent participant today industry expert and again, thanks Joe for taking the time.
Those of you may also be familiar with my colleague Matt Mills, who’s the head of value engineering at Everstream Analytics. And some of you may be familiar with any one of us where we’ve been doing supply chain risk management for a number of years. All of us are similar in that regard. In fact, we know each other and fight like a family and hopefully some of that will fun stuff will come out in today’s session. But look forward to touching more on that and I think you’ll find some informative information and some healthy discussion and debate. So with that, why don’t I continue?
So one of the things that wanted to kick today’s session off with, and some of you may be reading the newspapers and watching the TV and the news and getting your feeds on your email and so forth. If you’re on this webinar you can’t hide from all the things that are impacting supply chains these days. But there’s a few major things, in fact some things that one of us may talk about that are just happening in real time even as we’re on this webinar and broadcasting. But there’s a few things whether you are in supply chain, sourcing, procurement, professional, whether you’re a consultant, whether you are a practitioner, whatever you call your role at the company, you’re concerned with a few main things that are going on. You can’t escape the supply chain challenges, whether it’s the shipping costs or just can’t get items and so forth. So there’s no shortage of supply chain challenges these days. I joke now that even my parents know what I do now after the last few years, you can’t escape supply chain. Supply chain every moment of the day, no matter what medium you take information on and through.
There’s also a big driver now and [inaudible 00:05:33] has been hearing about it too, is around labor shortages. Obviously a lot of COVID related as we had spikes, people can’t go to work, they get kind of locked out, if you will, or it could be other things that are driving it from the pandemic outside the pandemic. But labor and dealing with labor shortages, labor availability is not just a local issue, it is truly a global problem and is impacting everywhere and it has been since the start and actually before the pandemic, if you actually look back to shortages on labor and other issues. So we’ll touch on these, but these are some of the key issues that are driving things these days.
Another one is definitely around inflation. These are the things that your CEOs, the leadership of every company is really seriously thinking about right now because it impacts lots of elements of business from pricing to dealing with customers, to getting availability of capital. You won’t be able to escape it and it’s already saying that this is going to be here for several more years and thus we’re an inflationary time and that’s a driver of business.
And then finally, this is an interesting one. So you go from supply chain to labor shortages to inflation and the last one is digitization. Well, why is this your CEO caring about digitization? Well, it is such an integral part of everything we’re doing now. Think about it. A lot of people are working from home, workplace is changing, the way people interact with products and services has changed. And I found an article in Forbes that talked about smart face masks and they were creating a digital mask. So I mean it really goes to show you that there is so much going on around digitization these days and it’s kind of weaved itself into the overall fabric. And in fact, that’s why we weaved it into this webinar as part of the webinar today.
So what’s really interesting is, now we’re two years into the pandemic and am amazed that businesses are still struggling. And one of the core aspects that we wanted to touch on today is why? Why is that happening? And with that, Joe, I wanted to pass the ball to you and how are you seeing companies from a sourcing, procurement, supply chain, from an organizational perspective dealing with this? Why after all this time are we still struggling? Because it’s amazing to me, but there’s so many things going on. I know you’ve dealt a lot with organizations and have been… Let me try to get to the next slide here. But I know that you’ve been dealing with this especially from an organizational perspective for many years, but maybe you can give some of your thoughts on this.
Joe Carson:
Yeah, Jon, thanks for having me on you. I mean it is kind of amazing and sometimes, especially when I think about, you and I have been in this conversation now for over a decade talking about the supply chain. So we wonder how someone could still be in denial over the need for it. And now we’ve been through this pandemic. Oh by the way, just like you mentioned, you kind of turn on today’s news and you look what’s happening in Eastern Europe or over in Asia and go, wow, am I thinking about the next thing that could be out there as well? So hard to believe about why that could be.
When I reflect upon, I’ve been in operations now for a couple decades, I think a little bit about the personality and the culture and the people and some of those experiences and that’s what I want to convey during this webinar, a little bit of some of the things that I found. I think for me, one of the things I’ve noticed about us supply chain folks is we’re a little bit like marines. We’re just sometimes not happy unless there’s mud on our face and people are yelling at us and we just used to having that role in the organization. So when it comes to sophisticated tools or strategies or thinking ahead or hand wringing or worrying, sometimes we’re just kind of not inclined to do that. And sometimes it takes kind of a motivating event to get us off that tactical focus and say, okay, we’ve just had enough. Whether it’s the pandemic or something else.
I was telling you guys just before this call, I was reflecting on experience I had at Micron. One of the things that really, what I’m proud to say is a fairly advanced program at Micron as my departure was what happened with a shortage of neon gases as a result of a Russian incursion into another country. It was several tiers down, but it turned out to be the straw that broke the camel’s back where the folks are going, wow, we really need to understand what’s happening multi-tier down in our supply chain and be able to get over our tactical focus. And that’s just going to be exacerbated later as we get through a number of issues that we’re kind of working on now.
To me, another part of the problem is the management thinking of do I really want to go on a limb and now I got this culture of taking care of things myself and what would it be like in the world where I have tools but I’ve spent some money and I’ve gone to my bosses and I’ve gotten funding and I’ve put my team through a software integration. Is that going to be worth it? Is that alternate universe going to be worth it? And I think the thing I’d offer, especially thinking about our history together is there’s plenty of alternate universes out there where even a small company could kind of say to themselves, what have other small companies done and what’s their world when they’ve invested in supply chain risk versus not?
It’s one of those things that once you’ve done it, once you’ve got the tools in place and the people in place and the right team members and you get used to hand wringing about things that could happen, it’s just not something you want to go back to.
Jon Bovit:
It’s fascinating that you bring up around, geez, when something happened and there was a Russia invasion of an area that caused a supply chain problem. Geez, where have I heard that before? And it’s driving global markets. Yeah, it’s amazing.
The other comment I was going to make, Joe, to what you were just saying is that, and I like to get your thoughts too, is a lot of times in the past supply chain organizations and leaders would throw people at a problem. Like you said, there’s a big event or something going on, a shortage, like you said, around neon gas or whatever it is and they would throw resources at it. But now with today’s labor shortage and people changing companies and lots of changes, I think that has an impact, a real impact to how you can deal with and mitigate lots of things going on.
Joe Carson:
Yeah, you’re spot on Jon, and probably not surprisingly, I have a few slides on that. Maybe go to my next slide and then let me do a bit of the setup of how I think about that. So, now let me get out of supply chain risk and let’s say I’m a VP of a supply chain, I have an organization I go run. And again, we have a pretty large role and the triangle on the left is kind of the pyramid of accountabilities of all the things you have to do. If I was a CPO over whether it’s several hundred people or a small team, you got a lot to get done and you got a lot to worry about. And those worries kind of range from the most strategic maybe your executive relationships with your suppliers and how you do your sourcing strategies and where you think you need to be down the road to the most tactical.
So it’s a fairly broad agenda, but as we all know what ends up happening is the call from your boss or your inbox ends up driving your agenda most of the time. So you just can’t say, yeah, I know I’m not going to make the quarter but I’m working this strategic topic over here, sorry I can’t make the meeting. That’s not an option. If we don’t have a way of handling the tact items easily, what ends up happening as an organization is your center of gravity on this pyramid of accountability ends up being far, far, far too low. Next slide.
And the issue that I’ve seen in the past is this pyramid accountability. Yes, there’s always this drive to push yourself higher on the agenda, but there’s more things kind of weighing it down. The labor shortage, you talked about fewer resources, whatever the source of it is, you’ll have fewer people to go get that done. When I think about inflation at 7.4% and the savings challenge that folks may have and the prospect of negative PPV, well, wait a minute, we’ve got labor rates going up. What am I going to do with prices with my customers? And so there’s going to be pressure on savings and that’s going to increase and get worse, not better. And then some of the geopolitical things that are happening now that folks are hopefully very aware of and those are absolutely growing and getting worse.
Jon Bovit:
And the whole near shoring, I mean how many times in your career has that happened? And it’s spinning back again, these companies are now evaluating, taking and putting the supply chain closer to where they need it. It’s coming full circle yet again. So the geopolitical aspects is amazing.
Joe Carson:
Yeah, absolutely. You’re spot on, and not going to get easier for sure. If folks are considering moving things out of Asia, it’s only going to get more difficult. But quite frankly, even more important, we talked about Russia and you think about also what’s happening in Taiwan and the pressure on the semiconductor industry and what’s happened to Taiwan. If you don’t have a plan for that or a plan for a plan, you’re really going to be struggling. Now on top of that, I’m working a lot of stuff in critical minerals and rare earth so this is a issue where you can get rare earths, which is a type of mineral that you need to make a lot of high technology products, you can get those from a lot of different places, but the throttle to turn it into a usable component is 90% through China. So if China decides, if our relationship turns bad, that they don’t want to deliver that to you anymore, that’s it. You’re done. You’re not going to get that anymore.
I bring that particular example up because that’s not something like, oh okay, I’ll just go pick another supplier. That’s something that requires a lobbying effort and a lot of organization here in the United States to kind of solve that problem. It’s really a huge problem. So the point is there’s just a lot of work to get done and your point about labor, let’s hop to the next slide, one of the things I’ve had to do to think about this is, well I got to find a way to get this done. You can’t whine to your bosses about well labor, whatever, you got to go get your savings, you got to go get it done. And you almost got to think about your organization very strategically and say, okay fine. I’ve got X number of people, whether you’re big or small, what are they spending their time doing and how can I get rid of the waste? So waste in people’s time and efforts.
If you think about it it’s almost like, to pick the movie Matrix, you got to almost think about your organization ones and zeros. How can I see my organization differently in terms of the inefficiencies? Where are they having to collect repetitive data or check on the web, what’s happening with my suppliers? And they’re having to do that time’s the number of people that you have so many times a day, that kind of repetitive work. Or not learning from the last event and having to figure it out on their own each time something happens. And where am I losing that efficiencies or using the wrong tools, et cetera?
And so the organizational conundrum is I got to get more out of my people to get done with fewer resources. I see this quite frankly in a number of clients, not just in supply chain risk, but others more organizationally, people are starting to think about how do I leverage technology to help fill those gaps I have in my pyramid of accountabilities? How can I use artificial intelligence to do the work, the repetitive work that it’s not really using my team efficiently, they don’t really like to do it, but where can I get kind of technology to supplement that?
And with that one, I think Matt, I know you’ve given a lot of thought in technology, I know we’ve done that, so maybe you have a word or two on how technology is leveraged, especially in this industry for the audience.
Matt Mills:
Yeah Joe. I think talking about throwing people at the problem or doing risk management and isolation, I mean those are all potential solutions. I would not say they’re the best solution, because you talk about labor shortage as you talk about doing more with less and what you really want is a way to risk adjust all of the decisions you make. So whether it’s what supplier I’m going to choose for a given product, whether it’s where I want to route my next shipment or whether it’s how I want to design my network going into the future looking at things like climate change and some of the broader impacts.
So, when we think about the solution set that’s available, what we’re really encouraging companies to do is think of ways that they can integrate risk insights into their processes and integrate risk insights into their decisions. So looking at the types of insights that you really need, you need something that’s holistic, that’s comprehensive of all the risks that you care about in your organization. You need something obviously that’s timely, real time, near real time dynamic changing with the multiple different factors that are in play, whether it’s you naturally or geopolitically or economically in the world, I’m looking end to end.
So too many organizations we see think of risk in silos, whether it’s my current risk, it’s the risk of my internal network, the risk in my logistics network. We really encourage companies to think end to end and think of that just the points along your supply chain, but also the flow of goods to make sure that you look at those as well. And then prescriptive. So looking forward, not just understanding what might happen or what is happening, but what are the options available to me and how can I use technology to uncover those options much more quickly and in context of the decision that I’m making so that I can drive those things? And so being able to take those insights, integrate them to processes across the plan source, kind of make the liver flow and not just integrating to your processes but integrating that data.
So whether that’s exposing those insights to the people that are making decisions in the solutions they make use every day, whether that’s pulling operational data into your risk management platform to expose that kind of confluence of data and improving those insights. And that’s really where the value is driven, is taking those insights, risk adjusting your decisions to make better decisions across an entire time horizon. Whether it’s the storm that’s coming tomorrow or whether that’s my supply chain going to look like in 5 or 10 years and being able to act faster. So compressing that planning horizon from days to hours in terms of identifying and assessing an event, from months to weeks in terms of how I’m going to make decisions further out in that time horizon.
So no longer is kind of mapping and monitoring the end solution, the end solution should be how do I integrate risk management across my entire organization into all my processes.
Jon Bovit:
That’s good Matt. I always appreciated your very direct, practical applying of and mapping of the technology to the processes. And then Joe, I think your perspective on being a leader and understanding how to and taking adoption of technology and driving it through, it’s really kind fascinating.
How did we all come together today? I guess just coincidence, just stumbled and came together today to talk about this. But no, really, it’s great. Thanks Matt.
So I think what we wanted to touch on, Joe, is kind of what are some common mistakes that we make around taking what Matt talked about and kind of driving it and actually an implementation and deployment?
Joe Carson:
Yeah, yeah. Picking up on a couple themes that we talked about. I think first of all it’s this kind of fear of failure and not getting started or not quite knowing where to start. I’m hoping we’ll be at a give folks that, so a starting point to get going. I think part of it, especially reflecting on some of the things that Matt said and some of the things we’re talking about earlier is this idea of the kind of player and the kind of thinking there has to be an organization. I really wanted to really focus on that.
So, the selection of a leader and then how that conversation get carried through the organization. And part of it is this idea of getting the player that you select to say, okay, I’m a CPO I’ve got… Again, if it’s one person, I’ve been an organization where procurement was maybe one or two people. An organization I’ve been at where it’s hundreds of people. So it’s a matter of carving out the right type of person. And to me the important thing is to pick a person who can make that pivot out of an operations role. The we can do anything or my supplier will call me, it’ll all be fine, quit worrying about Russia, Crimea or China, we’ll just call the supplier and we’ll just yell and scream and we’ll make it happen. Who can get out of that tactical role and pick someone who is good at being a proactive leader. So you can imagine the characteristics that’s going to be, and it’s great to pick someone who might have a fresh face. I’ve done it with especially younger team members who want to play a strategic role as a new area, it gives them a chance to communicate and lead and do some stuff cross functionally, and I’ll talk more about that in a second.
But really thinking about someone who has a proactive mindset, doesn’t mind being a hand wringer, doesn’t mind saying I’m going to lead a meeting about five things, four of them may not happen, one may kill us, we just don’t know which one it is and so we’re going to kind of talk through all of these and pick the right one.
So, it’s the picking of that right person I think is an important part as well as the leader setting very clear expectations that we’re going to set this up. That you’re going to have a supply chain risk management program, what your goals are, how you’re going to communicate? We’ll spend a little more time what that looks like. But I think there’s a real important role for the leader to be deliberate with their team members, with their peers and with their bosses around their desire to manage risk.
I told you the situation before that we had at Micron on the young gases, I had the fortune of that being a fairly difficult period to go through and, boy, everybody was aligned on, we got to go do something, Joe. Glad you’ve done this before, go set this program up. Some companies don’t have that luxury, so never let a crisis go to waste would be my advice. Use that leverage to say, look, there’s a way other companies have set these things up, we should go put that in place.
So I think the first thing I want to talk about is, what’s the first conversation? Maybe my next slide will help me support this point. And it’s a bit about the risk culture. It’s kind of a weird term. What’s the culture of managing risk that folks have to take in order to be prepared? And like I said, the kind of default for us operations folks is diving catch. We have a shortage, we’re not going to make a quarter, I’m going to call my supplier, I got the part, yay, the crowd roars and everybody’s excited and we all go back to our desk and go, man, that person did a great job of managing that but-
Jon Bovit:
Do we go back to desks anymore? I don’t know.
Joe Carson:
We’re back to the webinar and the [inaudible 00:28:40]-
Jon Bovit:
Back to the virtual desk. Yeah, that’s right.
Joe Carson:
That’s right. It’s right.
There’s a lot of individual glory in that and that’s super and great, you made it, but you’re not going to solve a neon gas problem or a rare earth problem or a re-shoring problem by doing it that way. So you’ve got to have a deliberate culture around, no, we’re going to gather all the right players, we’re going to have the right conversations, we’re going to be comfortable talking about risks that haven’t happened yet but for which we want to prepare. And of course making decisions and trade offs, One of the things I posted recently on LinkedIn, this idea that, look, even with all that you’re not going to be able to afford every mitigation. People say, oh why didn’t you bring all your inventory in? Well I can’t bring inventory in for everything. You’ve got to have some analysis and some discussion around how you do that and it’s got to be brought in with a broad spectrum of folks in that conversation. So installing that risk culture is kind of the first thing and then I’ve talked about the leader of the organization as well. So next slide kind of helped me with that.
So the other thing that is important is something that I call governance, the governance of managing risk and again, being very kind of organized and deliberate around how one does that. And so to me, establishing a charter, which I’ve always thought of a charter as that’s kind of my pass. If I’m the CPO and I give it to a team leader, look, I’m telling you it is an order from the boss to go develop and deploy a supply chain risk management system, including people, process, and tools. And here are your goals and here’s the things I want you to do and I want you to get back with me on your progress over time. So that the person that you put in charge has the authority to convene meetings and bring in testimony and call witnesses and prosecute a plan. So you’ve got to really provide that air cover to your organization to go get that done.
So this is an example of one that I’ve used before, fairly broad spectrum. And I think one of the things that you’ll notice is you’ve got a lead, and again it looks big. I’ve done it with a fraction of a resource and a fairly large multi-billion dollar company as the person who’s the lead, they’ve got a lot of accountabilities. You’ll notice that I bring a number of conversations together. A topic for a whole nother webinar is how I believe supply chain risk, care for business gets integrated with care for our environment and care for our fellow humans. Those conversations need to come together and this actually gives an umbrella for ESG and ethics and business risk to actually come together because that’s where I believe we’re going to have even more trade offs move going forward. Can’t get into that in this webinar.
But you’ll also notice that I bring in a number of players from around the organization. I can tell you that when I used to do these, I enjoyed these meetings, we probably had them quarterly or monthly depending on our circumstances. But kind of talking about what’s in the news, what could happen, what should we be thinking about, even brought in our government leadership person and said, hey, what things should we be working with the federal government? What laws are changing? And really thinking about the effect on all those things on our organization. So having that broad spectrum conversation and bringing it together and developing a set of priorities and plans is just critical.
Jon Bovit:
Sorry, save the applause I’m going to jump in there. I think what’s interesting about what you were saying this slide, previous slides and also what Matt said is that this applies to a lot of companies have an element of supply chain or risk management in the company that’s been there for years. And what I’ve also been seeing is that most companies are not at zero, they’re doing some things today, some elements of this, whether it’s cyber or quality or whatever, but they’re not doing a holistic program. So, I think that the concepts that we’re talking about here, both you and Matt apply to whether you are closer to the beginning, been doing it for a long time, but you could still apply a lot of these interesting concepts and frameworks and approaches. So, I think that’s pretty interesting as I was thinking through what both you and Matt were saying.
A lot of the folks that we’ve been working with at various companies for many years are still… I just had another call yesterday where they’ve been doing it for years and yet they’re trying to re-evolve the program. That means layering in more people process tools, bringing in outside consultants and retooling what they’re doing. I consider them really good at this stuff, so you can always get better as they say. So it’s fascinating.
Joe Carson:
That’s exactly right. And again I want to focus on not the big companies I’ve been with, the small companies I’ve been with, is the fact you can do this with a fraction of a resource but you just got to be organized and think about that continuum of what you want to grow over time. It’s not something you install immediately, but if you’re very deliberate about it and you set up the program and you bring in the right people, you should only get better over time. There’s a lot of different elements on, these are all part-time folks that are kind of brought in to help, it’s not a overly intensive investment. I know Matt has some thoughts about thinking about that investment and the return of that.
Jon Bovit:
Yeah, I know Matt has a few thoughts on that. I’ll advance the ball a little bit here and Matt…
Matt Mills:
Yeah, before I get into it I just want to kind of build on something that Joe said. I mean we do a lot of value assessments with a lot of different types of companies, large and small. I’m here to talk about the technology obviously, but I don’t want to minimize the people part of it. You can do it with a fraction of a resource but it has to be the right resource and the tone from the top that Joe alluded to earlier has to be really strong to get those people to give up part their job to go do something else, at least a part of the time.
We also see a lot of companies that are like, we want to invest in this area, we want to potentially increase our workforce because we think this is really valuable. Can you coach us on how to think about who that resource should be as well as how many resources if we use X solution or Y solution we should bring in. So I’m glad we have Joe here to talk about that because I think the organizational aspect of it and the change management requires is really important. So not just having the right people but the right amount of people. And that goes back to what are your goals, what are your executive goals and what are you trying to achieve? And so being really upfront about that.
Back to the technology. So I want to talk a little bit about what we see companies doing and where current solutions fall short. So we talked a little bit about throwing people at the problem and hiring a team of analysts so I won’t talk a lot more about that. But we also see a lot of companies that are only looking at standalone solutions. So whether that’s something to look at events that are happening in the world, whether that’s look buying something that looks at just supplier financial risk or just cyber security risk. And we really think that if you’re just focusing on one of those areas, then you’re not looking end to end, you’re not incorporating the cross-functional approach that Joe really talked about. So it’s really important for you to understand the types of risk you want to track and comprehend a platform to bring all of those together to drive insights and actions on them.
And then relying on third parties, whether that’s your freight forwarders or TMS to track risk on your shipments. There’s a reason that there are purpose built supply chain risk management solutions in the market and that’s because given the amount of data and other aspects we have to bring together to make sense of it it’s not easy to do. So thinking you’re going to outsource this and be successful in taking a comprehensive approach to the problem is not going to work. So in some of the issues you see on the right there with spending too much time in complete data, having been being siloed and then also very reactive. So when we think about what does the right type of solution look like, you can go to the next slide, Jon.
Jon Bovit:
One thing I was going to say Matt before we move on is that, and I don’t know how we got here today and talking about this, but these are exactly the issues that have been impacting companies for a long time. Whether it’s incomplete data, siloed, reactive time, I mean you hit the nail on the head here. So I think that’s great. I think it’s so true the more I think about it over the years. I’m advancing now but I wanted to comment on that because those are the key ones. I’ll tell you. I’m sorry, you continue
Matt Mills:
Oh no, go ahead. And the other thing is there’s a lot of companies that are going to provide you with data. Here at Everstream we track eight million sources of data a day. So having just access to data, even if you’re throwing a lot of people at it, I mean that’s a lot of googling for one or even three or four people to do. So using technology, some of the AI that Joe alluded, to be able to turn that into information to curate that for relevance to make sure you’re getting things that are relevant to the supply chain and relevant to you. And then mapping that further to your specific context, so providing that information in the form of insights and then providing those insights to the right people at the right time and the right system for them to take action on them. So it doesn’t really matter how much data you have, if you don’t have the ability by your technology and your people and your processes to turn those into actions and make the better faster decisions that we talked about earlier. Go to the next slide.
So we think about why it’s important. So Gartner, I saw on LinkedIn, had a little model that was similar to this that went out last night. But BCG, which you see on the right is a graph that shows how a shareholder return of companies that do a good job on supply chain resilience versus companies that don’t, so the green versus the red. And you can see that it’s pretty obvious that companies that have built kind of resilience programs, which is on the right hand side during crisis quarters where their market is in a downturn, they outperform their non resilient peers. But what was interesting about this study from BCG is that even in normal quarters, they’re still outperforming their peers by about 1600 basis points. So I thought that was a really interesting takeaway.
So what we see is and why that’s being happened is goes back to those better faster decisions. So they’re making better decisions up front so that the immediate impact of an external shock of a disruption is lower. They’re making faster decisions so that the speed of their recovery is faster and that the extent of their recovery is higher. So they’re really building the scar tissue. When you think about break a bone, it grows back stronger. Those resilient companies are really taking that approach to say we were disrupted, what do we do about it? What can we do about it in the future to make sure that it doesn’t happen again? And then that’s why you see the improved operational performance.
So, if you go to the next slide. That improved operational performance… Yep, go ahead Joe.
Joe Carson:
Matt, just want to make a comment about this because you’re kind of picking up on the theme that I said earlier about an alternate universe. I mean you’re kind of showing on those slides, that’s the alternate universe. So here other companies that have done this have just gotten better.
The thing I’ve seen that’s actually weird about this is going the other way. Sometimes companies that invested in risk have said, wow, should we continue to invest in risk because we don’t seem to have any more supply chain problems, maybe we should de-invest. And of course there’s a flaw to that logic because you go, well, it’s better because we are investing in it. Now we’re living in that alternate universe and you don’t want to get yourself off of that and go back to the old way of doing things. So I think that those data are really good representation of that concept.
Matt Mills:
That’s a great point. That’s the paradox of being a risk manager, when I was doing it is did nothing happen because nothing happened or did nothing happen because I’m doing a really good job?
Jon Bovit:
Yes but, we always err on you’re doing a great, great job.
Matt Mills:
Well I’m employed today so I must have done something right. So what we talk about, what does a good job look like? It’s really about, again, better decisions and faster action. So, having risk insights integrated to your processes, integrating to your data allows you to risk adjust your sourcing strategy, the way you plan your transportation, the way you plan your inventory. And that’s going to lead to real financial results, which is kind of on the previous slide. So you reduce the revenue and margin variability, you enable your revenue growth so you’re protecting the revenue you have so you can continue to grow. In some cases I’m sure there are examples on that previous slide of where the green bar companies took share from the red bar companies because they were able to recover more quickly.
You’re also reducing your environmental social impact, so this is the kind of triple bottom line approach is something we see really trending in the market today is how do I not just look at the business, the financial results, but also how do I look at my environmental social impact and factor that into my decisions.
And then faster action. So being able to increase my speed and incident response, exception management, supplier assessment and selection and then my overall network design leads to a lot of the same areas but also being able to secure allocations and anticipate cost shocks and optimize my human capital investment. And as you get into a process, as you’re looking at different solutions we always encourage you to partner with your solution provider to help them uncover some of these business value areas. So we’ve done various value assessments for companies where we’ve looked at what the impact would be on their expedited freight on their on time performance, on some of the cost shocks they’ve seen in the past and how being faster to act on those would help them to do that. As well as just general, how much revenue and margin am I protecting for my shareholders, my employees, et cetera.
And then I think the last slide I wanted to show here, so this is just the putting the capstone on the discussion that we’ve been having today between the three of us. So this is Supply Management Magazine, their view on the top procurement trends for 2022. I’ve looked at a lot of these lists. I would say three or five of these are pretty common across a lot of the lists. But looking at being able to prioritize risk management which is actually what we’re talking about today, investing in IT solutions, maximizing talent, increasing the visibility in your supply chain and then procurement taking more of a central role in company strategy. And I guess my advice on this particular list is not to look at this as a checklist but to look at where these areas come together. So how can I use technology to help in my risk management and my supply chains? How can I maximize my talent to drive value from my processes and my technology investments as well as empowering my procurement teams by giving them better data and better risk insights to achieve some of these other things. I don’t know if Joe, Jon you have other comments on this.
Joe Carson:
I mean you think about all the things that we talk about here and I’m going to start with the last one, procurement taking center stage. It’s one of the things is when I’ve ever taken over a procurement organization or worked with that team, you want to get yourself a seat at the table. Whether it’s in NPI conversation or it’s a business strategy, you’re struggling, I want to have a seat at the table. And then when you get a seat at the table, what are you going to say? And again, quite frankly the time is on us folks and it’s just amazing as I look down this list we’ve touched on all five in this conversation. So if you want to know what you’re going to talk about, talk your risk management program you put in place, how you’re going to leverage AI technology to make your team more efficient, have a high ROI, how you’re going to optimize your talent by not wasting their time on repetitive duties that maybe has been done before that gives you that multi-tier visibility in your supply chain and the ability to predict and do the right things for your business. This list is pretty comprehensive, a great capstone for our talk that today.
Jon Bovit:
It’s almost like we’ve thought through this, this flow. I don’t know if it’s just lucky or smart, I don’t know. But it’s somewhere in between. Because I know we’re starting to encroach on the time and Joe just to keep things moving, I think one of the other things we wanted to, as we start to wrap up was kind of cover on. I think the big struggle, whether it’s a company that has a program and wants to go into a world class program and evolve it and get better or cover more, how do they get started Joe? I know Matt, I’m sure you do have a point of view on this too. It’s like how do they get started? They might be at a certain point today, how do they get started whether it’s at the beginning of the journey or later in the journey, how do they do it? And I think you have a unique point of view on that.
Joe Carson:
Yeah and it’s why I wanted to make sure we covered this earlier is that idea of the risk culture, how we’re going to think about risk, it is just a different beast and you got to recognize that. Therefore, the selection of your leadership team member and that governance council. I remember several situations thinking through, you know how this works, problems don’t happen on a Tuesday morning at 10:00 after everybody’s had their coffee. They happen over a holiday or a weekend or when everybody’s off on summer. So if you don’t have a protocol set up for how you’re going to make decisions and how you’re going to be managing risk, whether that’s proactive or even reactive, you’re going to lose out because your suppliers are not going to take care of it for you, they have their own interests to take care of it. You’ve got to be managing that yourself.
So really thinking very deliberately about your culture, about your team members, about who you have and lead, how you communicated this out ahead of time is really the place I start, is this kickoff meeting and this very clear choice of managing it. And then life will present plenty of opportunities to pick a good example to get started off, whether it’s rare earths or Russian incursion or risk in Asia, you have plenty of things to go work on to say this is a good example of how we’re going to leverage the technology and get started.
That’s what my advice would be, really think about the culture and the people and the very deliberateness of the structure.
Jon Bovit:
Yeah, that’s great. No, I think that’s great. Appreciate that. So Matt, I guess-
Matt Mills:
The other thing I would add is on that fourth bullet there is, think about when you get back to better decisions, faster action. So start there when Joe talks about where I should start. Look back at some of the decisions I’ve made, the processes they were made in, where I was slow and let’s try to address those things and understand where those sit in my processes, what decisions I could be made better and what insights do I need to make those better. And that’ll guide a lot of how you build a technology strategy and integrate risk management into your digital overall digital transformation strategy as you build it out. I wanted to conclude a few kind of key use cases.
So when I was running a supply chain risk management program, we used to talk all the time about how it would be really great to bring together operational data and risk data and get this information in front of the commodity managers. We always thought that was kind of our version 3.0 of the program we were building. And now being at Everstream and I see companies doing this and it’s kind of like the future is now, so this is all really exciting. So, just to give you kind of a few more complicated or intriguing use cases that are driving a lot of value that we see in the market. The first is around sub-tier, not just looking end to end and looking broader in my supply chain but looking deeper in my supply chain.
So using products to uncover sub-tier discovery to use that to make better decisions deeper. So whether that’s just getting a head start on impacts or thinking about how having a relationship in my sub tier would transform my sourcing strategies or my buying strategies is something that a lot of our clients are looking at today. The second is being proactive, we always talk about being proactive. Mapping and monitoring isn’t enough, we have to be proactive and build more flexibility. So looking at my risk register within my supply chain, understanding what the most important risks are to me, whether that’s again rare earths or war in Europe or those types of issues. And then thinking about how can I be proactive to build capabilities to make sure that if something bad does happen or looking across multiple scenarios, am I best prepared to avoid impact altogether or mitigate the impact? Being able to use predictive analytics to anticipate inbound delays, so on a much tighter time horizon, how do I use predictive analytics and merge information from my TMS and my shipment data to look at things that are happening in the world and anticipate where there might be a delay? Whether that’s a storm or port congestion. If I can understand those things earlier, I can make better decisions up front to reroute or adjust my inventory strategy to make sure that I maintain my customer service levels.
And then finally prescriptive analytics. So not just what’s happening but what do I do about it. So bringing together information from my PLM, from where a particular material maps to my products, my TMS or my ERP around inventory I have, whether that’s in transit or in my warehouses. Understand what my available options are so when something happens, am I covered with inventory? Do I need to go chase a PO? Do I need to go talk to another supplier, qualify another supplier? So looking across those options and having that right on the dashboard of my buyer or my commodity manager or my logistics manager so that they can make the decision right away. It doesn’t have to be a war room type situation. Every time something happens I can give them the right information at the right time to make a better faster decision on the spot.
Jon Bovit:
Yeah, thank Thanks Matt. I feel like a news anchor on this side, I’m getting told in my ear that we need to start moving towards wrapping up, we’re getting near the end. But no, this has been fantastic. I think this is a nice way to wrap it up.
I think we have gotten a couple of questions and a couple things. Before we wrap and we run out of time, just to let the audience know that we just published this the other day, our 2022 annual supply chain risk report. If you look interested in getting some more details around some of our analytics and insights around some of the things that happened in the last year, please download that. It’s available at our website in the risk reports section.
The other thing, I think just looking at some of the questions here, I think we have a minute or two and Joe I think this is a good one for you and then Matt, please jump in because with your experience particularly as a practitioner. Joe, I think you’re uniquely qualified to answer this question so it’s just amazing that it happens to pop up here. But you’ve been a CPO before and the head of these organizations as you mentioned, whether it’s small, medium or large. So what does the head person look for to approve projects? I think I got that right. So in other words, I think we’ve touched on the technology, we’ve touched on the importance of the organization and what you need and some of the key issues, but how do they get started? In your experience, what is the CPO or whoever’s in charge looking for? [inaudible 00:56:02]
Joe Carson:
Yeah, so I won’t go into the obvious. So it’s obviously got to be good price and good product, all that stuff. But since it’s just the three of us and a couple hundred people, maybe the little bit what’s really going on in our head. I would say as is the case, many times I don’t want to be set up for embarrassment with my bosses. So, if I’m going to go ask for something I want to make sure it’s going to be a good idea. And I think the thing that kind of occurred to me as we’re going through this and having this conversation is, this idea of, Matt, you gave several cases where this has been done, we’ve been having this conversation for over 10 years now. Folks, there’s plenty of other companies just like you. I don’t know how many times I’ve heard people say, no, no, you don’t understand we’re different in our industry, there’s this one thing where you got to and the blah blah blah. You’re not different. There is a handful of companies, if not several handfuls that are just like you that have gotten started that are living in that world that Matt showed were, you got at least 16 basis points of improvements to go do that.
So I would say, boy, if you want to get a program through, work with whomever and get those other examples and say, look, all these other companies have done this and have been successful at it. It’s our turn to join that group and get ourselves started.
Jon Bovit:
So the looking at peers, whether that peer group is in the same industry, different industry, but pointing to them as an example?
Joe Carson:
Yeah. Maybe it’s size, maybe it’s the market, maybe it’s vertical. I mean whatever you think is your peer set that would be a good example where you’d almost be embarrassed to say, well these folks are doing it and we’re not, it’d be embarrassing not to do it. Not that it’s a stretch to go to take a risk to put in a program.
Jon Bovit:
That’s great.
Matt Mills:
I guess I would extend my advice beyond just the CPO to the executive team that has to approve these types of investments, and obviously it’s in my title. I would say number one, understand what it’s going to take to get something approved, understand the types of hurdle rates or paybacks or ROI that they’re looking for. And number two is partner with your solution provider to help you build the business case. Notice I said partner and not ask your solution provider. We find that the best business cases are really those that are built together. So help you understand what’s important to you, understand what value your company’s looking for, and then using your solution provider and then the resources available to you there to build that business case together to kind of bridge that gap between what the technology does and what you’re looking to achieve as an organization. So, having those conversations up front and taking a collaborative approach goes a long way to getting those things approved and getting at least your technology investment off the ground.
Jon Bovit:
That’s great. I appreciate Joe again. Joe, anyone who wants to contact, it’s been on a few slides but it’s also on the end here, [email protected] so feel free to contact him anytime. And again for Matt and myself, really appreciate everyone else participating. The replay and the slides will be available. If you don’t like it, download it more than once and give us a thumbs up. I don’t know if they can give us a thumbs up, but give us a thumbs up anyway. So I just wanted to wrap up with that. Thanks everybody and appreciate Joe and Matt, your time.
Joe Carson:
[inaudible 00:59:53] enjoyed the conversation. Always do.
Matt Mills:
Take care.
Jon Bovit:
Yep, take care.
Matt Mills:
Thanks guys.